Econonomics of Energy and Environmental Policy

Article Details

IAEE Members and subscribers to Economics of Energy & Environmental Policy : Please log in to access the full text article.

How Should Different Countries Tax Fuels to Correct Environmental Externalities?

Free Article

This essay discusses (based on a recent IMF study) how developed and developing countries alike might put into practice the principle of 'getting prices right' to address the major externalities from energy. The efficient set of taxes includes charges on fuel use for carbon and local pollution (with credits for emissions capture during combustion) and additional charges on motor fuels for road congestion and accidents (though the latter should transition to distance-based charges). Techniques and data sources for measuring the externalities and corrective taxes by country are discussed. In general, heavy taxes on coal and motor fuels are warranted (though there is substantial cross-country variation in corrective tax rates). For most countries, tax reform could yield considerable fiscal, health, and carbon benefits.
Download PDF Download Ebook
JEL Codes:H23: Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies, Q54: Climate; Natural Disasters and Their Management; Global Warming, D02: Institutions: Design, Formation, Operations, and Impact

Keywords: Corrective fuel taxes, cross-country externality measurement, climate change, air pollution, fiscal benefits

DOI: 10.5547/2160-5890.3.2.ipar

Reference information is available for this article. Join IAEE or purchase the article to view reference data.

Published in Volume 3, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.


© 2023 International Association for Energy Economics | Privacy Policy | Return Policy